HSBC's 2012 risk forecast: Lebanon risk lower than Egypt and Tunisia, similar to Bahrain and Morocco
“Uncertainty over the risks emanating from Syria, Iran, and Israel will weigh on investor perceptions of Lebanon in 2012,” according to a report issued by HSBC. In its Middle East Economics Q1 2012 report, HSBC measured the risks of countries in the Middle East.
Lebanon scored a total of 21 in the risk measurement (0 is lowest risk, 30 is highest risk). The indicator measures six risk factors: Domestic political risk, regional political risk, exposure to EU recession, exposure to EU deleveraging, impact of monetary policy, and strength of fiscal response.
HSBC forecast Lebanon’s GDP to be at around 2.3 percent in 2012, compared to an estimated 2011 GDP of 1.7 percent. It forecast the average GDP for the MENA region to be around 3.5 percent.
According to HSBC’s estimates, the total investment rate in Lebanon dropped by some two percent y-o-y in 2011. The bank expected this rate to rise by around two percent in 2012. HSBC said that the estimated Foreign Direct Investment (FDI) in Lebanon totaled $1.3 billion in 2011. It said that the FDI is expected to be at around $1.2 billion in 2012.
According to the report, some of the measures included in the 2012 budget plan (such as raising VAT to 12 percent and increasing taxes on bank deposits) could cause some short-term difficulties for the banking sector, though they would be useful in the long run.
The report said that Lebanese banks are struggling with concerns over their large-scale investments in Syria, alongside the slowdown in deposit growth. The report said that there is no sign that the Lebanese government will bring out the much needed reforms in 2012.
by Hanadi Chami
Date Posted: Mar 07, 2012